Accounting & Auditing
Accounting and auditing standards are at the core of the financial information infrastructure needed for financial development. They form the basis for reliable and transparent disclosure of information to relevant stakeholders, thereby facilitating informed financial decisions, efficient resource allocation, and the effective functioning of markets.
Common accounting standards and codes promote sound financial systems by enhancing the transparency and comparability of financial reports, thus increasing the ability of investors to assess potential investments. Two accounting frameworks are commonly used for financial accounting and reporting, namely the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS).
Accounting standards vary across Africa. Some countries, mainly in the SADC and COMESA regions, require IFRS to be used for both consolidated and standalone financial statements. IFRS is also used for these statements in South Africa, where for statutory accounts companies must use the local GAAP system, which is almost identical to IFRS. In other countries, such as Morocco, the local GAAP co-exists with IFRS; while the IFRS is required for listed companies, all statutory accounts must be prepared under the local Moroccan GAAP.
In many francophone African countries, financial statements are prepared in accordance with the Organization for the Harmonization of Business Law in Africa (OHADA) accounting framework, while the West African Accounting System (SYSCOA) is followed in some CFA francophone states of West and Central Africa. In other countries, such as Gabon and Senegal, local accounting standards apply.
Several countries have proposed a timetable for introduction of the IFRS with some countries planning for its adoption as early as 2010 (Mozambique) and 2012 (Morocco).
The critical shortage of qualified accountants and auditors in several African countries results in weak auditing and accounting regimes, and company accounts that are not comparable. Despite the growing recognition of the importance of financial reporting standards, many African countries lack a credible local accounting body with the ability to effectively enforce rules and regulations. Regional accounting organizations are playing an increasing role in efforts to harmonise standards in Africa, thereby facilitating cross-border transactions and investments.